Perú is the third largest country in South America, bounded on the north by Ecuador and Colombia, to the east by Brazil and Bolivia, to the south by Chile and to the west by the Pacific Ocean. It lies entirely within the Tropics between the Equator and 18° south. Geographically, Perú is divided into three major regions, a narrow coastal belt separated from the Amazon rain forest by the northern extension of the Andes mountain range. This narrow coastal belt is mainly desert and contains Perú's major cities and its best highway, the Pan-American, which runs the entire length of the country. The eastern slopes of the Andes receive much more rainfall than the western slopes and form part of the rain forest of the Amazon Basin.

Perú is one of the most extensively mineralised regions of the world and has a long history of mining activities dating back to pre-Columbian times. Perú plays host to some of the largest and lowest cost precious and base-metal mines in the world, including Alta Chicama, Yanacocha and Antamina. Many of the world's major mining companies, including BHP-Billiton, Newmont, Phelps Dodge and Barrick have operations in the country.

In 1991, the mining law was simplified and now provides an attractive framework for development of minerals projects. There are few limitations on holding mineral concessions in Perú. Concessions can be held 100% by national or foreign companies indefinitely provided that an annual fee of US$3.00 per hectare per year is paid to the government as a land tax. The same concession title is valid for exploration and for mining, hence there is no complicated 'conversion' procedure. Peru's clear and simple mining law and excellent geological potential has helped the country to attract one of the largest budgets for minerals exploration and development in the world.

Perú is a Presidential Democracy with Alejandro Toledo being the incumbent President and leader of the Perú Posible Party, which has 47 of the 120 seats in Congress. An Alliance has been formed with Frente Independiente Moralizador Party and the next elections are due in 2006. The current economic policy is broadly pro-market and focused on prudent fiscal management.

The population of Perú is 27.2 million and unemployment is approximately 9%. Real GDP growth was 4% in 2003 and is forecast to grow in 2004 by 4.2% and 4.4% in 2005, due for the most part to strengthening international prices for copper and gold. Inflation, which was 2.3% for the year, has been at OECD levels since 1999 and is likely to remain so for the foreseeable future. The floating Nuevo Sol is expected to remain among the least volatile of the Latin American currencies due to solid economic performance, which is driven by export growth and prudent macroeconomic management.

Of the total exports for the year, gold accounted for over 19% of the gross value, copper over 15% and zinc over 5%. Of the total export market, 26% of goods went to the US with 9% to China. Of the import market, 25% of goods came from the US with 8% from Chile. Perú has been accepted as an associate member of the Mercado Comun de Sur ("Mercosur"), the southern cone trading block, comprising Brazil, Argentina, Paraguay and Uraguay. It is hoped that Free Trade Agreements with the European Union and Asia may be concluded within the foreseeable future and that the withdrawal by Perú from the G-21 group of countries may lead the way to a Free Trade Agreement with the US.

The largest source of foreign investment in 2002 came from the UK, which invested US$2.5 billion into mining, petroleum and telecoms; Spain invested US$2.41 billion and the US$1.97 billion. Total foreign investment on the Lima Stock Exchange totalled US$2.87 billion at year end 2002.